8 Most Undervalued Gold Stocks To Buy According To Analysts

02. Fortuna Mining Corp. (NYSE:FSM)

Upside Potential: 32%

Forward Price to Earnings (P/E) Ratio: 7.66

Number of Hedge Fund Holders: 17

Fortuna Mining Corp. (NYSE:FSM) is an intriguing pick for investors seeking undervalued gold stocks. With a forward P/E ratio of just 7.66 as of October 12, 2024, and an upside potential of 32%, based on a target price of $6.28 against the current share price of $4.75, it fits comfortably into this category. The company’s ability to capitalize on operational excellence across multiple regions makes it a compelling investment.

Founded in 1990 and headquartered in Vancouver, Canada, Fortuna Mining Corp. (NYSE:FSM) operates gold and silver mining projects in several countries, including Argentina, Mexico, Peru, Côte d’Ivoire, and Burkina Faso. Its most prominent asset, the Séguéla gold mine in Côte d’Ivoire, covers 62,000 hectares and has become a key contributor to the company’s growth. Formerly known as Fortuna Silver Mines, the firm rebranded to Fortuna Mining Corp. (NYSE:FSM) in June 2024 to reflect its diversified portfolio in both precious and base metals.

Fortuna Mining Corp. (NYSE:FSM) Q2 2024 financial performance underscores its potential. The company generated $260 million in revenue, with gold contributing 81% of total sales. The business reported $113 million in adjusted EBITDA, reflecting a healthy 43% margin over revenue, and produced 116,000 gold equivalent ounces during the quarter. Free cash flow from operations came in at $39 million, with cash flow per share hitting $0.30, signaling strong operational efficiency.

A major highlight from Q2 was the successful ramp-up of the Séguéla processing plant, which operated 36% above its design capacity, mitigating power disruptions from the national grid. The company also advanced key capital projects, including the Lindero leach pad expansion, expected to be completed by Q4 2024, ensuring reserves for the next decade.

Fortuna Mining Corp. (NYSE:FSM) solid balance sheet strengthens its position, with $350 million in liquidity and a low net debt-to-EBITDA ratio of 0.2. A recent oversubscribed $172 million convertible notes placement further reduced borrowing costs, improving financial flexibility for future projects.

With effective cost management, including an all-in sustaining cost (AISC) of $1,097 per gold ounce, and promising exploration success at Seguela’s Kingfisher discovery, Fortuna Mining Corp. (NYSE:FSM) is well-positioned for growth. Its ability to perform across varying market cycles makes it a prime candidate among undervalued gold stocks.